Corporate Social Activism: A New Way to Build Reputational Value While Fighting for Social Justice

April 6, 2016, Roger Bolton

At the Page Society, we've advocated for some time that enterprises should build a strong corporate character anchored by a public-oriented purpose and an admirable set of values that guide their every action. By building not just customer and shareholder value, but social value, as well, we believe, companies can earn public trust.

Now, a new study shows that CEOs who take a public stance on social issues unrelated to their company's core business also can build reputational value. Writing in The New York Times, two researchers from Duke and Harvard, Aaron Chatterji and Michael Toffel, say their results "suggest that CEO activism can sway public opinion – and also increase interest in buying the company's products."

While relatively new, corporate social activism seems to be on the increase. Starbucks's CEO, Howard Schultz, fresh off his company's controversial "Race Together" initiative (an analysis of which won the Page Society's Annual Case Study Competition for a fine group of DePaul students this year), recently took a stand for civility and values-based leadership at the Starbucks Annual Meeting.

Last year's religious liberty law controversies in Indiana and Arkansas saw vigorous corporate opposition from Apple, Angie's List, Eli Lilly, Anthem and others. More recently, the gender marker law enacted in North Carolina drew condemnation from IBM, Dow, Biogen, PayPal and others.

Chatterji and Toffel found that respondents who were informed of CEO opposition to proposed legislation on controversial social issues were less likely to support the legislation than those who were not so informed. A separate study by the authors showed that CEO activism increased intent to purchase the company's products.

These findings provide support for Richard Edelman's long-held conviction that companies and CEOs must "…come out of the bunker, be out front and lead, do more than simply focus on delivering on the numbers, and be part of the solution to society's problems."

All of this suggests that the role of chief communications officers is both more complicated and more interesting and influential than ever before. As Gary Sheffer, the Page Society's immediate past chairman, wrote recently in a column for Fortune, "…smart leaders recognize that the CCO is a powerful partner in enhancing reputation, culture and commercial success."

Now, it seems, CCOs are well positioned to help CEOs navigate the controversial landscape of social activism, where taking a stand may be not only the right thing to do, but also represents an opportunity to strengthen corporate reputation.

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